This week’s EN Business Academy article addresses a critical topic for those of you who own your own businesses — having all the important documents you need stored safely in one place. Many thanks to Margaret Rizzo McKelvy of Mythic Landing Enterprises for writing this series.
If you’re like most horse people, your barn is more organized than your house. Your tack room probably contains neat rows of bridles, saddles and girths, but your office probably contains messy piles of papers. And while I can’t expect your office to have color-coded wall-sized dry erase boards, filing cabinets galore and a frequently-used Staples Rewards card … if you’re going to organize one aspect of your office, you should create an “Important Stuff” binder for your business.
Your first step is to go to Staples and purchase a 1-inch binder (they have an entire wall of binders, so you can pick one out that matches your cross country colors!) and a small pack of sheet protectors (typically the smallest quantity is 25 for less than $10). So for less than $20, you’re on your way to having a better-organized business.
Your next step is to set aside some time for a scavenger hunt through your office, home and tack room. You’re looking for any important piece of paper relating to your business. So depending on your normal level of organization, this could take an hour or an entire day. Regardless, it will be time well spent! On your hunt, you’re going to be looking for the following documents:
1. Original letter from IRS assigning EIN number
This is the letter you received from the IRS assigning you your federal Employer Identification Number. Just like each individual has a Social Security Number, each business has an Employer Identification Number. If you’re not sure that you even need an EIN, the IRS has this handy “Do You Need an EIN?” page on its website.
You will probably have a similar document from your state government, but each state is a little different, so you will need to check with your state. But if you simply search “registering company in (your state),” it should give you what you need.
2. Copy of your W-9
Your W-9 form is used when any business needs to have your name, address and EIN/SSN number so that they can give you payment for any contracted work. A W-9 form may also be requested when a company needs to issue you a 1099 form at the end of the year, which is basically a year-end report of any payments made to you for contracted work throughout the year. It’s much easier to have both a hard copy and an electronic copy of your W-9 form so that you can easily send it along to companies when they request it. Click here for a fill-in W-9 form courtesy of the IRS.
An example of when you would need a W-9 would be: Each year, my company organizes regular clinics with top riders. In order to pay the clinician, I need a copy of their W-9 form. This has all the information I need to then issue the clinician a 1099 form at the end of the year. I only need this for clinicians because they are considered independent contractors, not regular employees. Need help figuring out if someone is an independent contractor or an employee? The IRS has an information page for that as well.
3. Operating agreement and/or mission statement
Large corporations often have official bylaws governing their organization, while smaller companies can have operating agreements. Either way, this document essentially outlines the structure of the company and assigns individuals responsibilities. Personally, I like to include my company’s mission statement with this document. Your mission statement basically outlines the purpose of your company and it’s reason for existing. A lot of people can get hung up on their operating agreement and mission statement, but, just like your business plan that we talked about a few weeks ago, both of these documents can be adjusted at any time.
4. EFTPS letter with enrollment
EFTPS stands for the U.S. Department of Treasury’s free “Electronic Federal Tax Payment System.” This system allows you to pay your taxes either online or over the phone and, trust me, it will make your life easier! The IRS has a guide to the EFTPS program here. But you will want to save the letter they send you after you enroll with your PIN number on it.
5. Original bank documents
Ideally, you have separate bank accounts for your personal and business affairs. Anytime you open a bank account, they will give you a small packet of information with all relevant information. Keep this info and put it in your binder. If your account is already open and you threw those documents out, you should be able to go to your bank, and they should be able to print you out a copy for your records.
6. Employee contracts and tax documents
You should definitely have a signed contract with any employee that works for you. You should even have signed contracts with any working students or interns. And it’s never too late to get a contract signed, so don’t worry if you don’t currently have any contracts with your employees or working students. The best thing to do is contact a lawyer that specializes in equine law. This will probably be one of the priciest projects for your business, but one of the most necessary.
In order to withhold taxes from employees, you will need a W-4 form from each employee. This form gives you the necessary information needed so that you can withhold the correct federal income tax from their paychecks. Here is a copy of the current W-4 form. With each new employee, you will also need to file an I-9 form. This is the Employment Eligibility Verification Form, which simply verifies that the employees is eligible to be employed in the United States. You can find a copy here.
7. Blank copy of your release form
If you own your own farm, you probably already have a release form for anyone who rides on your property. If not, add this to the list for your new lawyer. Simply keep a hard copy of your release form in your binder in case you lose your electronic copy.
8. Insurance documents
Do you have teaching insurance or property insurance? If so, great! Simply keep a copy of your proof of insurance in this binder. If not, you should check with an insurance agent to see what sort of coverage you need. You can ask your friends for some recommendations and start making phone calls. Just be sure that your company has experience with horses so that you can be sure you’re getting the coverage you need.